Indian cabinet clears TAPI gas pipeline deal


NEW DELHI  - The Indian government has approved a deal to buy natural gas from Turkmenistan via a $7.6 billion pipeline passing through Afghanistan and Pakistan, reports said on Thursday.The cabinet approved the signing of the Gas Sale and Purchase Agreement as well as the payment of a transit fee to Afghanistan and Pakistan for allowing the pipeline to pass through their territory, the Press Trust of India reported. The 1,735-kilometre pipeline is likely to be operational by 2016, the news agency said, quoting a government official. Turkmenistan has the world’s fourth-largest gas reserves and energy-hungry India and Pakistan are both eager to tap this source.The announcement comes after New Delhi said this week it would cut purchases of Iranian oil by 11 per cent following US pressure to isolate the Islamic republic over its disputed nuclear programme. Washington favours the Turkmenistan pipeline and has pressured both India and Pakistan to hold off on a pipeline deal with Tehran.Energy-scarce India, which imports four-fifths of its crude, says it shares the US anti-nuclear proliferation goals but it views Iran as an important source of oil to feed its economy’s fast-growing needs. The cabinet allowed state-run gas-firm GAIL (India) Ltd to sign a gas purchase agreement with Turkmenistan’s national oil firm, for supplies from a planned multi-national pipeline, a government statement said.The proposed TAPI gas pipeline will have a capacity to carry 90 million cubic metres a day (mcmd) gas for a 30-year period and will be operational in 2018, the statement said.India and Pakistan would get 38 mcmd each while the remaining 14 mcmd will be supplied to Afghanistan, it said.Turkmenistan, which holds more than four per cent of the world’s natural gas reserves, is hosting a meeting next week with participants in the US-backed TAPI project to link Turkmen gas fields with India.Petroleum Minister S Jaipal Reddy is scheduled to lead a delegation to Turkmenistan to sign the agreement on May 23-24. India has nominated state-run GAIL for the purchase of gas.The pipeline route, particularly the 735-km Afghan leg, presents significant security challenges and will require Pakistan and India to agree on price and other aspects. Participants must also secure funding for the project. “The provisions of the GSPA (Gas Sale Purchase Agreement) have been structured to protect India’s commercial interests as India is at the tail end of the pipeline,” the statement said, without elaborating further.“Transit fee and security aspect have been settled,” a government source, who did not wish to be identified told reporters after the cabinet meeting. Separately, an oil ministry official said that the transit fee for the gas has been fixed at about 50 cents per million British thermal units (mmBtu).The TAPI pipeline is estimated to cost about $10-12 billion, while development of the gas field may cost about an additional $10 billion, said Daniel D Stein, senior energy adviser at the US Department of State said in a presentation in March.India, Asia’s third largest oil consumer, imports about 80 per cent of its oil needs while falling local gas output has forced it to buy costly liquefied natural gas. The planned pipeline will help India and Pakistan diversify their gas supply, while Turkmenistan, a former Soviet republic, wants to triple annual gas exports to 180 billion cubic metres by 2030, looking beyond its traditional partner Russia to wider export markets.Turkmenistan aims to supply natural gas from its Galkynysh field, better known by its previous name, South Iolotan, to Pakistan and India. British auditor Gaffney, Cline & Associates has said the gas field is the world’s second-largest.

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